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The Myth of the American Dream: De Jure Segregation and Memphis

Original illustration by Hannah Rice '24, an Illustration major at RISD

The notion of the American Dream, an idealized image of class ascendancy, has long pervaded the public perception of success in the United States. The American Dream functions by championing hope, protecting existing class structures, and appealing to the Protestant work ethic. The ability to achieve success irrespective of origin and obstacle is crucial to belief in the American Dream, where the American public is inclined to treat success as the result of individual efforts rather than structural factors. Anecdotal evidence of class ascendency through “hard work” obscures larger social forces and structural inequalities. Inherently rooted in whiteness and white idealism, the American Dream is unattainable because of white supremacist policies imposed by our government. Thus, it is imperative to dismantle the illusion of the American Dream as a purely individualistic and universally attainable ideal.

The ownership of property has long been associated with American values—independence, security, and upward mobility. The building of post-World War II suburbia exemplifies a major shift in American housing history, where the federal government dedicated substantial effort and resources to build homes and fund home ownership. A manifestation of capitalistic consumption, dependence on the private automobile, upward mobility, the nuclear family, and socioeconomic exclusiveness, the suburban boom represented a broad cultural shift in postwar America, with suburban life both appealing to and promoting values of privacy, individualism, property rights, and traditional gender roles. At the end of WWII, Congress approved billions of dollars for the Federal Housing Administration (FHA) as mortgage insurance, making home ownership accessible to middle-class Americans. Additionally, the Servicemen’s Readjustment Act of 1944 enabled GIs returning from the war to receive housing. With the full support and endorsement of the federal government, the number of single family homes during the postwar era boomed from just 114,000 homes in 1944 to 1,692,000 in 1950. 

Although associations like the FHA opened up opportunities for widespread home ownership, these organizations adopted discriminatory measures such as redlining and restrictive covenants. In fact, many of the patterns of residential segregation and disparities in housing opportunities that exist today are a result of deliberate government policies implemented in the postwar period. The American public tends to believe that today’s racial wealth disparities stem primarily from de facto, or private, segregation. However, the truth is that federal, state, and local governments played active and significant roles in creating and maintaining de jure racial segregation, shaping the landscape of today’s cities and suburbs. Without our government’s purposeful imposition of racial segregation, de facto causes such as racial prejudice in the private sector, real estate steering, bank redlining, and self-segregation through “white flight” would have less opportunity for expression.

Memphis, Tennessee stands as a prime example how historically discriminatory housing policies continue to impact communities today. Listed in the top four most dangerous cities in the United States, today’s Memphis has severe issues of poverty, crime, and violence. These issues did not appear in a vacuum, but can be tied back to historically-explicit racist policies. 

In 1909, Edward “Boss” Crump was elected mayor of Memphis. Under Crump, residents in predominantly Black neighborhoods from west of Lauderdale Street to Mississippi Boulevard were displaced under the guise of “slum clearance.” A couple decades later, under Roosevelt’s New Deal in the mid-1930s, the Memphis Housing Authority (MHA) was created. As a racist strategy to prevent Black Americans from entering predominantly white areas, the MHA cited the doubling of Memphis’ Black population over the previous 30 years to justify tearing down a 46-acre area with single-family homes, replaced with a 900-unit public housing complex. 

In 1933, the Home Owners’ Loan Corporation (HOLC) was created as a part of President Franklin Roosevelt’s New Deal to refinance mortgages to prevent foreclosures. The HOLC used redlining to determine which neighborhoods were eligible for loans based on “risk factors.” However, maps were created based almost entirely on race. Neighborhoods deemed high-risk were predominantly Black, and thus their residents were ineligible for federal loans. Furthermore, racially restrictive covenants, endorsed by private and federal agencies alike, were contractual agreements that prohibited homeowners from selling to people of non-white ethnicities, mostly Black Americans. Both redlining and restrictive covenants effectively shut Black Americans out of the housing market by restricting them to under-resourced and economically-depressed neighborhoods. The exclusion of non-white neighborhoods from federal support denied Black people the same access to home ownership, and thus the accumulation of wealth, that whites had. 

Furthermore, the inability of Black Americans to obtain mortgages further enabled real estate agents to perform ‘blockbusting.’ Real estate agents hired Black women to walk around with baby carriages and staged robberies in white neighborhoods to make white residents believe that Black people entering the neighborhood would drive down property values. This convinced white people to sell their homes at below-market prices, which real estate agents would then sell to Black families at above-market prices. Because Black Americans were ineligible for federal loans, agents sold these houses with installed monthly payments. Exponentially-inflated sale prices made late payments more likely, enabling agencies to evict the owners, preventing them from accumulating equity. The agents would then find new prospective buyers, and the cycle would continue.

In Memphis, blockbusting triggered the first wave of white flight, the mass movement of white middle-class residents from cities to suburbs––most of which were listed by home developers as “whites-only” for the purpose of being greenlined. The tax base funding inner-city public schools dissipated with white flight, closing off many opportunities for Black communities. Currently, the highest concentration of jobs, educational attainment, and wealth remains east of the inner city, a prominent white flight destination. 27 percent of Black Memphians live in poverty compared to 10.3 percent of White Memphians; just 42% percent of Black residents are homeowners, compared to 72 percent of White Memphians. This racial wealth gap, seen all across America, can not only be attributed to centuries of slavery and systemic oppression, but also the federal government’s role in creating and maintaining segregation. 

This history of segregationist policy has shaped the Memphis we know today. Lack of opportunity and enforced poverty have created a city the American public sees as deteriorating, dirty, and dangerous. However, the American Dream, with its emphasis on hard work and individual success, hides systemic barriers faced by marginalized communities in Memphis to perpetuate a narrative of white idealism. Through the propagation of this myth, the public is able to use racial scapegoating and demonizing language to ignore de jure segregation created by the federal government, placing blame on Black inner-city residents and the urban poor for their own financial misfortunes. Only by creating more equitable housing can we begin to solve the pervasive issues that Memphis and other cities face today. Only by addressing our federal government’s racist legacy can we begin to tackle the illusion of the American Dream and move towards a future where all Americans have an equal opportunity to succeed. 

Moving forward, we must critically examine and challenge the narrative of the American Dream to acknowledge that success and upward mobility are not solely determined by individual efforts but deeply influenced by structural factors and historically cemented policies. To create a more equitable nation, we must advocate for policies that promote fair and inclusive housing practices; challenge discriminatory lending; advocate for the enforcement of fair housing laws; and invest in affordable housing initiatives in marginalized communities.

[The Brown Political Review receives support from the Stone Initiative on Inequality for work relating to wealth inequality in the United States. BPR maintains editorial independence over the columns and stories published.]